Can salaries and re-election prevent political corruption? An empirical evidence

Abstract

Background and objectives: This paper mainly focuses on decisions taken by politicians that may affect the level of municipal corruption. Specifically, we study whether local politicians’ incentives to be corrupt are influenced by the wages they receive and/or their intention to run for next elections. This issue has hardly been empirically tackled before at local level. Method and data: Our sample comprises 358 Spanish municipalities of over 20,000 inhabitants for the period 2004–2009. We use two different methods of estimation, ordinary least squares and ordered logit model, to analyze the influence of politician's wages and/or their intention to seek re-election on corruption. We utilize as gauge of corruption the total cases of urban corruption (reported in the online press) in each municipality during this period. Results: We show an impact of wages and re-election on corruption. First, relatively higher wages do not reduce politicians’ incentives to be corrupt. Second, when politicians want to be re-elected, corruption decreases. We also find that income level, income inequality, education level, municipal urban revenues and touristic nature of the municipality affect corruption. Conclusions: Our findings suggest that it is necessary that local governments pay particular attention to rules related to the way politicians’ wages are set and the term limits restrictions.